March 19, 2013 Performance Review
Below is the performance of the nine stocks from our March 19, 2013 Nasdaq 100 watch list (found here) compared to the performance of the Nasdaq 100 Index gain of +29.63% over the last year.
| Symbol | Name | 2013 | 2014 | % change |
| GRMN | Garmin Ltd. | 34.23 | 52.19 | 52.47% |
| BIDU | Baidu, Inc. | 84.81 | 160.59 | 89.35% |
| NUAN | Nuance Communications, Inc. | 18.51 | 15.95 | -13.83% |
| ISRG | Intuitive Surgical, Inc. | 481.76 | 423.07 | -12.18% |
| WFM | Whole Foods Market, Inc. | 43.07 | 53.93 | 25.21% |
| MSFT | Microsoft Corporation | 28.08 | 37.7 | 34.26% |
| ROST | Ross Stores Inc. | 55.81 | 72.67 | 30.21% |
| AAPL | Apple Inc. | 458.91 | 524.69 | 14.33% |
| LMCA | Liberty Media Corporation | 111.5 | 135.25 | 21.30% |
| Average | +26.79% |
Below is the performance of the top five stocks on the watch list from last year. The average gain was +28.20%.
Garmin (GRMN) was a stock of interest to us last year. While we liked GRMN, we suggested that the stock had downside risk of –22%. In retrospect, potentially losing –25% was a decent risk/reward proposition. Last month we recommended that the principal be sold in GRMN in order to secure investment gains. For now, the stock has declined marginally.
We highlighted Intuitive Surgical (ISRG) with a concern that the stock had price gains without the necessary rising trading volume. We said the following:
“As with our observation on Apple’s (AAPL) contracting volume as the price rose, ISRG has experienced the same phenomenon (found here). In addition, as ISRG has declined recently, the amount of average volume has increased dramatically. This suggests that there may be support for the idea that this stock could fall much lower from the current levels.”
Dow Theory indicated that downside risk was to $426 and $342 levels. Although ISRG easily achieved the $426 downside target the $342 target was missed by 2.5%. As seen in the performance chart above, ISRG declined as much as –26% within the last year and currently lingers with a –12% loss.
The last stock that we mentioned was Whole Foods Market (WFM). We said the following of WFM:
“Finally, Whole Foods (WFM) is on our watch list for the first time since the July 23, 2009 Dow Theory bull market initiation of the New Low Observer. In the run up to the 2005 peak and December 2008 bottom, Whole Foods had had increasing volume all the way. However, as the stock price rose from the 2008 low, Whole Foods has had a continued decline in trading volume. More recently though, the decline from the October 5, 2012 top has resulted in higher average volume indicating that those wishing to get out are doing it in “droves.” Dow Theory suggests that the following downside targets are $70.25, $54.44 and $38.64. Whole Foods falling to the $70.25 level could mean that the situation is dire, from a price standpoint.”
Since our commentary on Whole Foods, the stock has only increased in value. In fact, March 19, 2013 marked a lull in the stock price before rising nearly +52%.
The performance of Whole Foods Market was in stark contrast to our analysis at the time. This reiterates the importance of considering stocks on our watch list as a decent starting point for investment opportunities.
March 14, 2014 Nasdaq 100 Watch List
Below are the eight Nasdaq 100 stocks that are of interest to us.
| symbol | Name | Price | P/E | EPS | Yield | P/B | % from low |
| CTSH | Cognizant Technology Solutions | 50.25 | 24.94 | 2.02 | - | 5.01 | 0.14% |
| CHRW | CH Robinson Worldwide Inc. | 51.14 | 19.30 | 2.65 | 2.70 | 8.32 | 0.24% |
| SYMC | Symantec Corporation | 20.16 | 16.26 | 1.24 | 2.90 | 2.41 | 0.75% |
| SPLS | Staples, Inc. | 11.30 | 12.05 | 0.94 | 4.10 | 1.19 | 1.44% |
| CTRX | Catamaran Corporation | 45.87 | 36.12 | 1.27 | - | 1.93 | 5.47% |
| MAT | Mattel, Inc. | 37.28 | 14.46 | 2.58 | 4.00 | 3.87 | 6.58% |
| CSCO | Cisco Systems, Inc. | 21.35 | 14.04 | 1.52 | 3.50 | 1.99 | 6.86% |
Watch List Summary
Our recent purchase of Robinson Worldwide (CHRW) on February 26, 2014 reflects our interest in the stock going forward. At the time of purchase we said the following:
“Robinson Worldwide (CHRW) is within 5% of the one year low and can be found on our most recent Nasdaq 100 watch list dated February 21, 2014 (found here). Robinson Worldwide (CHRW) has increased the dividend consistently over the last 17 years (found here). Our purchase of CHRW constitutes approximately 15% of our portfolio with the goal of increasing our holdings on subsequent declines.
“According to Dow Theory, Robinson Worldwide has the following downside targets:
“Based on the Value Line Investment Survey dated February 28, 2014, Robinson Worldwide has an estimated fair value of $89. Robinson Worldwide has seen the number of shares outstanding unchanged since 1998. Since 2004, long-term debt has increased to $500 million which was tacked on in 2013. Prior to 2013, CHRW had zero debt.
“According to Edson Gould’s Altimeter, Robinson Worldwide is trading at an equivalent price to the 2009 low.
“In spite of the favorable indications for CHRW, investors need to consider downside risk and allocate capital accordingly.”
A stock that has not been on our watch list in a while is Staples (SPLS). The last time Staples was on our list was December 24, 2012. We think a graphical representation of where SPLS was in terms of price would be helpful.
After bottoming in the last half of 2012, Staples increased by +52% before collapsing to the current level. Dow Theory suggests that this is a classic retest of the prior lows. However, venturing into this morass could be hazardous. The remaining downside targets for SPLS are $9.37 & $7.04. Anyone interested in buying Staples should assume that the $7 level is a given, just to be safe.
"Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results. The better sales will be the frosting on the cake." –Warren Buffett